~hehe the underlying critical architecture of the Chinese economic
model is structurally flawed and President Trump with his current
economic team understand the weakness better than all international
adversaries.
[Originally posted in 2017] To understand the China ‘One-Belt / ‘One-World‘ economic trade strategy it becomes necessary to understand how structurally weak the Chinese economy was when created.
People
often talk about the ‘strength’ of China’s economic model; and indeed
within a specific part of their economy -manufacturing- they do have
economic strength.
However, the underlying critical architecture of the Chinese economic
model is structurally flawed and President Trump with his current
economic team understand the weakness better than all international
adversaries.
Lets take a stroll and lightly discuss.
China is a central planning economy. Meaning it never was an
outcropping of natural economic conditions. China was/is controlled as a
communist style central-planning government; As such, it is important
to reference the basic structural reality that China’s economy was
created from the top down.
This construct of government creation is a key big picture
distinction that sets the backdrop to understand how weak the economy
really is.
Any
nations’ economic model is only as stable (or strong) as the underlying
architecture or infrastructure of the country’s economic balance.
Think about economic strength and stability this way: If a nation was
economically walled off from all other nations, can it survive? …can it
sustain itself? …can it grow?
In the big picture – economic strength is an outcome of the ability
of a nation, any nation, to support itself first and foremost. If a
nations’ economy is dependent on other nation to survive it is less strong than a nation whose economy is more independent.
Most Americans don’t realize it, but China is an extremely dependent nation.
When the central planning for the 21st century Chinese Economy was
constructed, there were several critical cultural flaws, dynamics
exclusive to China, that needed to be overcome in order to build their
economic model. It took China several decades to map out a way to
economic growth that could overcome the inherent critical flaws.
Critical Flaws To Exploit:
♦Because of the oppressive nature of the Chinese compliant culture,
in the aggregate the citizens within China do not necessarily innovate
well or create new innovation. The “Compliance Mindset” is part of the
intellectual DNA strain of a Chinese citizen.
Broadly speaking, the modern era Chinese are not able to think
outside the box per se’ because the reference of all civil activity has
been a history of box control by government, and compliance to stay
(think) only within the approved box. The lack of intellectual thought
mapping needed for innovation is why China relies on intellectual theft
of innovation created by others.
Historically American culture is based around freedom of thought and
severe disdain of government telling us what to do; THAT freedom is
necessary for innovation. That freedom actually creates innovation.
Again,
broadly speaking Chinese are better students in American schools and
universities because the Chinese are culturally compliant. They work
well with academics and established formulas, and within established
systems, but they cannot create the formula or system themselves. The
modern Chinese strategy has been to compensate for this deficit by
having Western universities train and educate their youth.
♦ The Chinese Planning Authority skipped the economic cornerstone.
When China planned out their economic entry, they did so from a
top-down perspective. They immediately wanted to be manufacturers of
stuff. They saw their worker population as a strategic advantage, but
they never put the source origination infrastructure into place in order
to supply their manufacturing needs. China has no infrastructure for
raw material extraction or exploitation.
China relies on: importing raw material, applying their economic
skill set (manufacturing), and then exporting finished goods. This is
the basic economic structure of the Chinese economy.
See the flaw?
Cut off the raw material, and the China economy slows, contracts, and
if nations react severely enough with export material boycotts the
entire Chinese economy implodes.
Insert big flashy sign for: “One-Belt / One-Road” HERE
Again, we reference the earlier point: Economic strength is the
ability of a nation to sustain itself. [Think about an economy during
conflict or war] China cannot independently sustain itself, therefore
China is necessarily vulnerable.
China is dependent on Imports (raw materials) AND Exports (finished goods).
♦The 800lb Panda in the room is that China is
arguably the least balanced economy in the modern world. Hence, China
has to take extraordinary measures to secure their supply chain. This
economic dependency is also why China has recently spent so much on
military expansion etc., they must protect their vulnerable interests.
Everything important to the Chinese Economy surrounds their critical
need to secure a strong global supply chain of raw material to import,
and leveraged trade agreements for export.
China’s economy is deep (manufacturing), but China’s economy is also narrow.
China could have spent the time to create a broad-based economy, but
the lack of early 1900’s foresight, in conjunction with their communist
top-down totalitarian system and a massive population, led to central
government decisions to subvert the bottom-up building-out and take
short-cuts. Their population controls only worsened their long term
ability to ever broaden their economic model.
It takes a population of young avg-skilled workers to do the hard
work of building a raw material infrastructure. Mine workers, dredge
builders, roads and railways, bridges and tunnels etc. All of these
require young strong bodies. The Chinese cultural/population decisions
amid the economic builders precluded this proactive outlook; now they
have an aging population and are incapable of doing it. They also rely
on a labor workforce from North Korea that few people ever discuss.
This is why China has now positioned their economic system as dependent on them being an economic bully. They must retain their supply chain: import raw materials – export finished goods, at all costs.
This inherent economic structure is a weakness China must continually address through policies toward other nations. Hence, “One-Belt / One-Road” is essentially their ‘bully plan’ to ensure their supply chain and long-term economic viability.
This economic structure, and the reality of China as a dependent
economic model, also puts China at risk from the effects of global
economic contraction. But more importantly it puts them at risk from
President Trump’s strategic use of geopolitical economic leverage to
weaken their economy.
Nuance and subtlety is everything in China. Culturally harsh tones
are seen as a sign of weakness and considered intensely impolite in
public displays between officials; especially within approved and
released statements by officials representing the government.
Historic
Chinese cultural policy, the totalitarian control over expressed
political sentiment and diplomacy through silence, is evident in the
strategic use of the space between carefully chosen words, not just the
words themselves.
China has no cultural or political space between peace and war; they
are a historic nation based on two points of polarity. They see peace
and war as coexisting with each other. China accepts and believes opposite
or contrary forces may actually be complementary, interconnected, and
interdependent in the natural world, and they may give rise to each
other as they interrelate to one another. Flowing between these polar
states is a natural dynamic to be used -with serious contemplation- in
advancing objectives as needed.
The Chinese objective is to win, to dominate, using economic power.
Peace or war. Win or lose. Yin and Yang. Culturally there is
no middle position in dealings with China; they are not
constitutionally capable of understanding or valuing the western
philosophy of mutual benefit where concession of terms gains a larger
outcome. If it does not benefit China, it is not done. The outlook is
simply, a polarity of peace or war. In politics or economics the same
perspective is true. It is a zero-sum outlook.
Therefore, when you see China publicly use strong language – it
indicates a level of internal disposition within Beijing beyond the
defined western angst. Big Panda becomes Red Dragon; there is no
mid-status or evolutionary phase.
♦U.S. President Donald Trump
and the U.S. economic team fully understand this dynamic and fully
understand the inherent needs of China. When you are economically
dependent, the ‘bully plan’ only works until you encounter a ‘stronger
opponent’. A stronger opponent is an economic opponent with a more
broad-based stable economy, that’s US.
President Trump, Commerce Secretary Ross, Treasury Secretary Mnuchin
and U.S. Trade Representative Lighthizer, represent the first
broad-based national team of economic negotiators who know how to
leverage the inherent Chinese economic vulnerability.
Every American associated with investment, economics and China would
be well advised to put their interconnected business affairs in order
according to their exposure.
President Trump will not back down from his position; the U.S. holds
all of the leverage and the geopolitical economics must be addressed.
President Donald Trump and his team are entirely prepared for this.
Donald Trump has been discussing this for more than two decades. We are going into economic combat with China!
China’s objective is conquest. China’s tool for conquest is
economics. President Trump’s entire geopolitical strategy, using
economics in a similar way, is an existential threat to China’s
endeavor. Communist Beijing calls the proverbial DPRK shots.
President Trump is putting on a MASSIVE economic squeeze.
♦Squeeze #1. Trump and Mnuchin sanctioned Venezuela and cut off their
access to expanded state owned oil revenue. Venezuela now needs more
money. China and Russia are already leveraged to the gills in Venezuela
and hold 49% of Citgo as collateral for loans outstanding. Now China and
Russia will need to loan more, directly.
♦Squeeze #2. China’s geopolitical ally, Russia, is already squeezed
with losses in energy revenue because of President Trump’s approach
toward oil, LNG and coal. Trump, through allies including Saudi Arabia,
EU, France (North Africa energy), and domestic production has driven
down energy prices. Meanwhile Russia was bleeding out financially in
Syria. Iran is the financial reserve, but they too are energy price
dependent.
♦Squeeze #3. Trump, Tillerson and now Pompeo put Pakistan on notice
they need to get involved in bringing their enabled tribal “extremists”
(Taliban) to the table in Afghanistan. Pakistan’s primary investor and
economic partner is China. If U.S. pulls or reduces financial support to
pressure Pakistan toward a political solution in Afghanistan, China has
to fill void.
♦Squeeze
#4. China’s primary economic threat (competition) is next door in
India. President Trump has just embraced India as leverage over China in
trade and pledged ongoing favorable trade deals. The play is MFN (Most
Favored Nation) trade status might flip from China to India. That’s a
big play.
♦Squeeze #5. President Trump launched a USTR Section 301 Trade
Investigation into China’s theft of intellectual property. This
encompasses every U.S. entity that does manufacturing business with
China, particularly aeronautics and technology, and also reaches into
the financial services sector.
♦Squeeze #6. President Trump, Secretary Ross, Secretary Mnuchin and
USTR Robert Lighthizer renegotiated NAFTA to create the USMCA. One of
the primary objectives of team U.S.A. was to close the 3rd party
loopholes, including dumping and origination, that China uses to gain
backdoor access to the U.S. market and avoid trade/tariff restrictions.
[China sends parts to Mexico and Canada for assembly and then back-door
entry into the U.S. via NAFTA.]
♦Squeeze
#7. President Trump has been open, visible and vocal about his
intention to shift to bilateral trade renegotiation with China and
Southeast Asia immediately after Team U.S.A. concluded with NAFTA
renegotiation. Those negotiations are now ongoing.
♦Squeeze #8. President Trump positioned ASEAN (Association of
Southeast Asian Nations) as trade benefactors for assistance with North
Korea. The relationship between ASEAN nations and the Trump
administration is very strong, and getting stronger. Which leads to…
♦Squeeze #9. President Trump has formed an economic and national
security alliance with Shinzo Abe of Japan. It is not accidental that
North Korea’s Kim Jong-un fired his last missile over the Northern part
of Japan. Quite simply, Beijing told him to.
♦Squeeze #10. Tariffs.
Add all of this up and you can see the cumulative impact of President
Trump’s geopolitical economic strategy toward China. The best part of
all of it – is the likelihood China never saw it, meaning the sum
totality of “all of it”, coming… until 2018.
The Olive branch and arrows denote the power of peace and war. The
symbol in any figure’s right hand has more significance than one in its
left hand. Also important is the direction faced by the symbols central
figure. The emphasis on the eagles stare signifies the preferred
disposition. An eagle holding an arrow also symbolizes the war for
freedom, and its use is commonly referred to the liberation fight of
righteous people from abusive influence. The eagle on the original seal
created for the Office of the President showed the gaze upon the arrows.
The Eagle and the Arrow – An Aesop’s Fable
An Eagle was soaring through the air. Suddenly it heard
the whizz of an Arrow, and felt the dart pierce its breast. Slowly it
fluttered down to earth. Its lifeblood pouring out. Looking at the Arrow
with which it had been shot, the Eagle realized that the deadly shaft
had been feathered with one of its own plumes.
Moral: We often give our enemies the means for our own destruction.
https://theconservativetreehouse.com/2019/03/30/reminder-chinas-structural-economic-weakness-why-they-need-one-belt-one-road/
Posts
